Working Capital – Last Jeudi http://lastjeudi.org/ Tue, 27 Sep 2022 08:08:06 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://lastjeudi.org/wp-content/uploads/2021/03/cropped-icon-1-32x32.png Working Capital – Last Jeudi http://lastjeudi.org/ 32 32 Electronics Mart India IPO: Check Issuance Size, Open Date, Attribution & Other Details https://lastjeudi.org/electronics-mart-india-ipo-check-issuance-size-open-date-attribution-other-details/ Tue, 27 Sep 2022 07:27:17 +0000 https://lastjeudi.org/electronics-mart-india-ipo-check-issuance-size-open-date-attribution-other-details/ The initial public offering (IPO) of consumer durables and electronics retailer Electronics Mart India will open on October 4. The company plans to raise Rs 500 crore through this issue. The IPO will close on October 7. The shares will be allocated on October 12 and the initiation of redemptions will be made the following […]]]>

The initial public offering (IPO) of consumer durables and electronics retailer Electronics Mart India will open on October 4. The company plans to raise Rs 500 crore through this issue. The IPO will close on October 7. The shares will be allocated on October 12 and the initiation of redemptions will be made the following day. The shares are expected to list on October 17 on BSE and NSE. The IPO will be open to mainstream investors on October 3. Anand Rathi Securities, IIFL Securities and JM Financial Consultants are the main managers of the IPO. KFin Technologies Limited is the Registrar of the IPO.

Go Digit IPO: Cross-investments in similar companies may be a concern for Sebi

It is proposed to use the net proceeds of the issue for the following purposes: 1. Financing of capital expenditure for the expansion and opening of stores and warehouses. 2. Financing additional working capital needs. 3. Reimbursement / prepayment, total or partial, of all or part of the loans contracted by the company. 4. General business objectives.

In September last year, the electronics retailer filed draft documents with SEBI. The company plans to use the proceeds worth Rs 111.44 crore for capital expenditure and Rs 220 crore for additional working capital requirements. Additionally, the company will use Rs 55 crore to repay its debt.

From Paytm to Nykaa, lots of IPOs happen, but who exactly is making money?

Electronics Mart India offers a diverse range of products with a focus on Major Appliances (Air Conditioners, TVs, Washing Machines and Refrigerators), Mobile Phones and Small Appliances, Computers and others. The company’s offering includes more than 6,000 SKUs (Stock Keeping Units) across all product categories from more than 70 brands of consumer durables and electronics.

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Berry Global: trading at 7x earnings and a 17% FCF yield (NYSE:BERY) https://lastjeudi.org/berry-global-trading-at-7x-earnings-and-a-17-fcf-yield-nysebery/ Sat, 24 Sep 2022 15:35:00 +0000 https://lastjeudi.org/berry-global-trading-at-7x-earnings-and-a-17-fcf-yield-nysebery/ Phuket/iStock via Getty Images Introduction Most of you know by now that I focus primarily on a company’s ability to generate positive free cash flow before you consider making an investment. While income statements are helpful, I’m more interested in how the paper profits are actually converted into dollars in the bank account. world bay […]]]>

Phuket/iStock via Getty Images

Introduction

Most of you know by now that I focus primarily on a company’s ability to generate positive free cash flow before you consider making an investment. While income statements are helpful, I’m more interested in how the paper profits are actually converted into dollars in the bank account. world bay (NYSE: BERY) is a large packaging company generating very strong free cash flow which makes it cheaper than some of its peers like Amcor (CDMA) that I discussed in another article. Despite its lower valuation, Berry Global is still often overlooked by the investment community despite its status as a cash flow generator.

Chart
Data by YCharts

Berry is a real cash flow machine

Berry’s fiscal year ends at the end of this month, which means that the most recent financial statements available to the investment community are the third quarter results, which provide insight into the company’s performance as of during the first nine months of its fiscal year.

Total revenue for those first three quarters rose nearly 9% to just under $11.1 billion, helping Berry report operating profit of $906 million. Clearly the company is feeling the impact of lower margins, with operating income down almost 8% from the first nine months of the prior year, despite lower restructuring and transaction activity. .

income statement

Berry Global Investor Relations

Net earnings for the first three quarters were $4.02 per share, an increase over the same period last year due to lower finance charges, lower other charges and lower average tax rate. This helped Berry’s bottom line post a 6% increase in net profit, and as Berry repurchased shares, the number of shares declined, resulting in an EPS increase of nearly 7%.

And as you can see above, the third quarter was quite strong with reported net income of $207 million, which resulted in EPS of $1.61 per share. A solid third quarter, which helped boost 9M 2022 results.

Regarding the cash flow result, Berry disclosed total operating cash flow of $345 million, which included an $800 million investment in working capital. A quick look at the balance sheet mainly shows a reduction of $533 million in accounts payable and a further decrease of $76 million in accrued personnel costs while there was a slight increase in the total amount of accounts receivable and stocks. Total operating cash flow was approximately $1.2 billion after isolating changes in working capital position and adding the total amount of deferred taxes paid.

Cash flow statement

Berry Global Investor Relations

After deducting the $556 million in investments, the adjusted cash flow from operations was approximately $650 million, although we probably still have to deduct some lease payments which are likely included in “net cash from fundraising activities”. Since Berry lists about $100 million in short-term lease debt, it’s safe to assume that lease payments are around $25 million per quarter.

The economic crisis obviously has an impact

As you can see below, Berry Global has an excellent track record of growing revenue, EBITDA, EPS and FCF by double-digit percentages.

EBITDA evolution

Berry Global Investor Relations

This obviously requires effort, and the current inflationary environment may bring this trend to an abrupt end. We already know how Berry Global fared in the first three quarters of the year, so even if its last quarter would be bad, the 2022 fiscal year would still be quite satisfactory. But it will be interesting to see how Berry copes with changing consumer trends and declining levels of consumer confidence in the future.

For 2022, the company reiterated its official guidance: it expects to report EPS of $7.40, which would mean the company is trading at less than 7x earnings. The official cash flow forecast calls for a free cash flow result of $750, and as you can see below, this includes approximately $150 million of non-recurring working capital items which account for the decrease from compared to previous free cash flow guidance of $900 million to $1 billion.

Tips for the whole year

Berry Global Investor Relations

We’ll see in a few months how Berry Global fared in fiscal 2022, but it’s clear that the free cash flow result will be strong again.

It is also important to understand that of the $750 million in investments, only about $340 million supports capital expenditures. And even if you add the cost reduction investments but exclude the growth investments, the total number of investments is around $500 million per year. This means that if Berry stopped continuing to grow, capital expenditure would drop by about a third and free cash flow would increase by about the same percentage.

Breakdown of capital expenditure and allocation of capital

Berry Global Investor Relations

Investment thesis

From now on, the company’s capital allocation decisions will be very important. The company does not pay a dividend, but it has been buying back its own shares relatively aggressively, as it has spent nearly $640 million on stock buybacks. Since the balance sheet still contains about $9 billion in net debt, I wouldn’t mind seeing Berry hoard a little more cash to move down his leverage guidance range of 3 to 3.9 times l ‘EBITDA.

I sold put options on Berry Global and those options are now “in the money” after the weak stock price performance over the past few days and weeks. This means that I will probably have to take delivery of the stock.

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Presentation of Microbix at the Muskoka Capital Conference https://lastjeudi.org/presentation-of-microbix-at-the-muskoka-capital-conference/ Wed, 21 Sep 2022 11:09:06 +0000 https://lastjeudi.org/presentation-of-microbix-at-the-muskoka-capital-conference/ This section is Partnership Content Provided The content in this section is provided by GlobeNewswire for the purpose of disseminating news releases on behalf of its customers. Postmedia has not reviewed the content. by GlobeNewswire Breadcrumb Links GlobeNewswire Author of the article: Publication date : Sep 21, 2022 • 18 minutes ago • 3 minute […]]]>

Content of the article

Meetings with growth-oriented investors, September 23-25, 2022

MISSISSAUGA, Ont., Sept. 21, 2022 (GLOBE NEWSWIRE) — Microbix Biosystems Inc. (TSX: MBX, OTCQX: MBXBF, Microbix®), a life sciences innovator, manufacturer and exporter, announces that it will present to investors at the Muskoka Capital Conference, hosted by Capital Event Management Ltd. and hosted at JW Marriott Rosseau Muskoka, Minett, Ontario September 23-25, 2022.

Content of the article

Microbix CEO Cameron Groome and COO Ken Hughes will engage in a series of 18 one-on-one meetings with growth company investors during the formal portion of the conference. The presentation slides they speak to will be posted on Microbix’s website at https://microbix.com, along with other business information and its financial disclosures.

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About Microbix Biosystems
Microbix develops proprietary biological technology solutions for human health and well-being, with over 100 skilled employees and sales approaching C$2.0 million per month. It manufactures a wide range of critical ingredients and devices for the global diagnostics industry, including antigens for immunoassays and its laboratory quality assessment products (QAPs™ IVD or RUO test controls) that take support clinical laboratory proficiency testing, enable test development and validation, or help ensure quality in clinical diagnostic workflows. Microbix antigens enable antibody testing from more than 100 international diagnostic companies, while its QAPs are sold to clinical laboratory accreditation bodies, diagnostic companies and clinical laboratories. Microbix QAPs are now available in over 30 countries, distributed by 1WA (Oneworld Accuracy Inc.), Alpha-Tec Systems, Inc., Diagnostic International Distribution SpA., Labquality Oy, The Medical Supply Company of Ireland, R-Biopharm AG , SDT Molecular Pte Ltd, Seegene Canada Inc. and Thomas Scientific LLC. Microbix is ​​ISO 9001 and 13485 accredited, registered with the US FDA, registered with the Australian TGA, approved by Health Canada and provides CE marked products.

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Microbix also applies its biological expertise and infrastructure to develop other proprietary products and technologies, including Viral Transport Medium (DxTM™) to stabilize patient samples for molecular diagnostic laboratory testing and Kinlytic® urokinase, a biological thrombolytic drug used to treat blood clots. Microbix is ​​listed on the TSX and OTCQX and is headquartered in Mississauga, Ontario, Canada.

About Capital Event Management Ltd. and the event
Capital Event Management Ltd. produces several investor events each year across North America and the Bahamas. Participants include leading public and private companies, as well as an investor mix of investment advisors, fund managers and high net worth investors. Capital Event’s unique event formats aim to enable principals to build new, lasting relationships that lead to funding, open market support and increased awareness within the investment community. Further information on the Muskoka event is available at https://cem.ca/conference/muskoka-capital-event/

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Forward-looking information
This press release contains “forward-looking information” as that term is defined under applicable securities laws. Forward-looking information includes, but is not limited to, discussions of Capital Event Management Ltd. and its conferences, Microbix’s business activities and results, its objectives or prospects, risks associated with financial results and stability, development projects such as those mentioned in its corporate presentation, sales to jurisdictions foreign exchange, engineering and construction, production (including cost, quality, quantity and delivery time control), currencies and exchange rates, maintaining profitability and a adequate turnover, or the raising of additional capital on terms acceptable or not at all, and other similar statements regarding anticipated future events, conditions or results that are not historical facts. These statements reflect management’s current estimates, beliefs, intentions and expectations; they are not guarantees of future performance. The Company cautions that all forward-looking information is inherently uncertain and that actual performance may be affected by a number of important factors, many of which are beyond the Company’s control. Accordingly, actual future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied by the forward-looking information. All statements are made as of the date of this press release and represent the judgment of the Company as of the date of this new press release, and the Company undertakes no obligation to update or change any forward-looking information.

Please visit www.microbix.com or www.sedar.com for the latest Microbix news and filings.

For more information, please contact Microbix at:

Cameron Groome,
CEO
(905) 361-8910
Jim Currie,
CFO
(905) 361-8910
Deborah Honig,
Investor Relations
Adelaide Capital Markets
(647) 203-8793
ir@microbix.com

Copyright © 2022 Microbix Biosystems Inc.
Microbix®DxTM™, kinlytic®and QAPs™ are registered trademarks of Microbix Biosystems Inc.

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Lassonde is a Juic Potentially https://lastjeudi.org/lassonde-is-a-juic-potentially/ Mon, 19 Sep 2022 18:28:33 +0000 https://lastjeudi.org/lassonde-is-a-juic-potentially/ Lassonde Industries Inc. (TSX:LAS.A, Financial) is the largest producer of fruit juices and beverages in Canada and one of the leading producers of store brand shelf stable beverages in the United States. The company has 17 factories in North America and an extensive distribution system for its branded products in Canada. As the fruit juice […]]]>

Lassonde Industries Inc. (TSX:LAS.A, Financial) is the largest producer of fruit juices and beverages in Canada and one of the leading producers of store brand shelf stable beverages in the United States. The company has 17 factories in North America and an extensive distribution system for its branded products in Canada. As the fruit juice market in Canada is still quite fragmented, the company continues to grow by making acquisitions.

Lassonde also makes fruit-based snacks, cranberry sauce and other cider-based drinks.

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The stock has sold over 60% from its all-time high in 2018 and is down 45% from the high in 2021. The shares are trading at 8x average core free cash flow de Lassonde over five years (see operating cash flow table below).

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Financial indicators

Operating profit (EBIT) in 2021 was approximately C$118 million ($88.85 million). Given the company’s enterprise value of approximately C$1 billion, this equates to an enterprise value to Ebit ratio of less than 9. Lassonde’s median 10-year enterprise value to Ebit ratio was above 14. Therefore, a return to normalized enterprise value/Ebit would mean an increase of more than 35%. The stock looks very cheap and the company is buying back shares aggressively.

Financial results are stable, with high single-digit operating margins and consistent cash generation. Recent performance has been negatively impacted by inflation, causing margins to squeeze and the stock to fall. As shown in the graph below, operating profit and operating margins are below trend. I expect them to come back as the business adjusts to inflationary pressures.

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With the exception of the post-pandemic period, the company’s base free cash flow (adjusted for working capital) has grown steadily at a compound annual growth rate of over 6%.

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In addition, Lassonde’s balance sheet as at June 30 shows a low long-term debt of $156 million.

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Control

The company was created more than 100 years ago from a Quebec fruit stand and is still controlled by the Lassonde family through high voting B shares, which are not traded.

Lassonde’s book value has steadily increased in double digits over the long term. Family control provides the business with good capital allocation and management.

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Conclusion

Lassonde could be an excellent low-risk opportunity in a recessionary environment. It has low leverage and a strong balance sheet.

Additionally, the valuation panel suggests the stock is cheap on an absolute basis.

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Due to the emergence of inflation, stocks have traded lower due to passing emissions, but I believe they will recover as Lassonde adjusts its prices to restore profitability. The business has been boring but steady for the past 30 years and I expect that trend to continue. The company boasts a decent scale, wide distribution, and retailer relationships. Plus, he pays a decent 2.5% dividend, which grows, and redeems his shares.

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MTNN launches N23 billion CP to boost working capital https://lastjeudi.org/mtnn-launches-n23-billion-cp-to-boost-working-capital/ Sat, 17 Sep 2022 19:04:08 +0000 https://lastjeudi.org/mtnn-launches-n23-billion-cp-to-boost-working-capital/ MTN Nigeria Communications (MTNN) Plc, has proposed the issuance of up to N23 billion Series 3 Commercial Paper to increase its working capital. This was announced in a statement signed by MTNN Company Secretary, Uto Ukpanah on the Nigerian Exchange Limited (NGX). Commercial paper is short-term debt securities typically issued by creditworthy companies seeking to […]]]>

MTN Nigeria Communications (MTNN) Plc, has proposed the issuance of up to N23 billion Series 3 Commercial Paper to increase its working capital.

This was announced in a statement signed by MTNN Company Secretary, Uto Ukpanah on the Nigerian Exchange Limited (NGX).

Commercial paper is short-term debt securities typically issued by creditworthy companies seeking to raise funds from the public to meet working capital requirements as a viable alternative to bank credit.

MTNN said the proposed Series Three Commercial Paper is part of its N150 billion issuance scheme.

According to the statement, MTN Nigeria Communications is informing Nigerian Exchange Limited and the investing public of its plan to issue up to N23 billion Series Three Commercial Paper under its Commercial Paper Issuance Scheme. of 150 billion naira.

“The issue is part of the company’s strategy to diversify its financing options, with funds earmarked for working capital and general corporate purposes. Further details of the issuance as well as subsequent issuances will be released to the market as the transaction progresses.

In the first six months of 2022, MTN Nigeria recorded a total profit of N181 billion. The amount is 28% higher than that recorded during the same period last year at N141.8 billion. Total revenue for the period was N950 billion, up 20% from N791 billion in the first half of last year.

MTN Nigeria CEO Karl Toriola said: “During the first half of 2022, we have made good progress in building the resilience of the business in the face of our increasingly challenging operating environment with the rise in energy, food and general inflation which puts pressure on consumer spending. ”

Toriola noted that “the company remains focused on building the strong foundation for growth we have laid thus far. We will continue to increase raw connections to grow our subscriber base to offset the impact of the expected increase in churn in Q3 2022.

“We will continue to accelerate rural connectivity and expand our 4G network to reach our coverage target of 80% by the end of the year. We plan to begin the initial launch of 5G services in all six geopolitical zones in Q3 2022, in line with our licensing requirements, and unlock many new consumer and enterprise use cases.

“We will also continue to pursue our home broadband strategy to capture a significant share of market growth while leveraging fixed wireless, fiber and 5G access technologies for enhanced speeds.

“However, we expect a more normalized trajectory in Q4 2022. After commencing commercial operations of MoMo PSB, our goal is to build an inclusive platform for customers, ecosystem partners and other stakeholders. Additionally, we plan to deliver more advanced services in collaboration with ecosystem partners in the country.As we execute our strategy to support growth, we will continue to implement appropriate interventions while navigating an environment difficult to operate.”

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DVIDS – News – Multiple Construction Contracts Awarded for Pier 35 Repairs and Building 35 Demolition at Gould Island Naval Undersea Warfare Center https://lastjeudi.org/dvids-news-multiple-construction-contracts-awarded-for-pier-35-repairs-and-building-35-demolition-at-gould-island-naval-undersea-warfare-center/ Thu, 15 Sep 2022 19:26:00 +0000 https://lastjeudi.org/dvids-news-multiple-construction-contracts-awarded-for-pier-35-repairs-and-building-35-demolition-at-gould-island-naval-undersea-warfare-center/ From Naval Facilities Engineering Systems Command Mid-Atlantic Public Affairs NORFOLK, VA – Naval Facilities Engineering Systems Command Mid-Atlantic (NAVFAC MIDLANT) has awarded Swan Contracting, Peterborough, New Hampshire a $9,428,740 Firm Fixed Price Task Order (N4008522F5879) under contract multi-award construction project for repairs to Pier 35 and demolition of Building 35 at the Gould Island Naval […]]]>

From Naval Facilities Engineering Systems Command Mid-Atlantic Public Affairs

NORFOLK, VA – Naval Facilities Engineering Systems Command Mid-Atlantic (NAVFAC MIDLANT) has awarded Swan Contracting, Peterborough, New Hampshire a $9,428,740 Firm Fixed Price Task Order (N4008522F5879) under contract multi-award construction project for repairs to Pier 35 and demolition of Building 35 at the Gould Island Naval Undersea Warfare Center Newport, Rhode Island.

Work to be carried out includes repairs to Pier 35 to restore capacity to safely demolish Building 35. Repairs to the wharf include repairing corrosion spalling on the under deck and pile caps, coating the steel pipe piles and adding two or four anodes to the steel piles. The demolition of building 35 includes the contents of building 35 and the port and starboard elevators above their concrete encasement. The contents of Building 35 will be safely removed and the building itself will be deconstructed and completely removed from Gould Island, and disposed of at an appropriate facility.

Work will be performed in Newport, Rhode Island, and is expected to be completed by 2024.

Fiscal 2022 working capital funds (Department of Defense) in the amount of $9,428,740 are committed to this award and will not expire at the end of the current fiscal year.

Four proposals were received for this task order. NAVFAC MIDLANT is the contracting activity (N40085-22-D-0026).

NAVFAC MIDLANT provides facilities engineering, public works and environmental products and services in an area of ​​responsibility that stretches from South Carolina to Maine, and as far west as Michigan and up to Indiana. As an integral member of the Navy Mid-Atlantic Region Team Commander, NAVFAC MIDLANT provides leadership through the regional engineering organization to ensure that facilities and infrastructure of the region are managed effectively and efficiently.

For more information about NAVFAC MIDLANT on social media, follow our activities on Facebook at www.facebook.com/navfacmidatlantic and on Instagram @navfacmidatlantic.







Date taken: 14.09.2022
Date posted: 15.09.2022 15:26
Story ID: 429412
Location: NORFOLK, Virginia, USA






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Insiders buy Comera Life Sciences (CMRA) shares. Here’s why. https://lastjeudi.org/insiders-buy-comera-life-sciences-cmra-shares-heres-why/ Tue, 13 Sep 2022 18:38:37 +0000 https://lastjeudi.org/insiders-buy-comera-life-sciences-cmra-shares-heres-why/ Shares of Comera life sciences (NASDAQ:CMRA) rose more than 30% following a wave of insider buying. As its name suggests, Comera is a life sciences company looking to improve traditional IV injections through its SQore platform. SQore addresses formulation challenges with “new patented excipients” that can improve ease of administration. Comera partners with pharmaceutical and […]]]>

Shares of Comera life sciences (NASDAQ:CMRA) rose more than 30% following a wave of insider buying. As its name suggests, Comera is a life sciences company looking to improve traditional IV injections through its SQore platform. SQore addresses formulation challenges with “new patented excipients” that can improve ease of administration. Comera partners with pharmaceutical and biotechnology companies to help improve drug delivery and develop a portfolio of proprietary SQore therapeutic products.

Prior to September, no insider bought CMRA stock in 2022. Now even the CEO is buying stock. Let’s get into the details.

Insiders buy CMRA shares

CFO Michael Campbell started the wave of insider buying. On September 8, he bought 25,000 shares at an average price of $2.07. Prior to the purchase, he owned no shares in his company. The next day, Chairman and CEO Jeffrey Hackman bought 47,600 shares at an average price of $2.06. Like Campbell, Hackman owned no shares prior to the purchase. Then, on September 12, director James Sherblom bought 50,000 shares at an average price of $2.03. After the purchase, Sherblom now owns a total of 371,163 shares.

Also, it should be noted that none of the three purchases above were made through a pre-arranged 10b5-1 trading plan. Insiders often buy or sell stock in their own company using this plan to avoid insider trading charges. The exact reason for the purchases is unclear, although insiders only buy shares of their own company for one reason: they believe the price will rise.

On August 31, the company announced that it had entered into a purchase agreement with Business Solutions for the Arena. Pending approval from the U.S. Securities and Exchange Commission (SEC), Comera will have the right to sell Arena up to $15 million in stock over a three-year period. Hackman added, “The strengthening of our balance sheet will help us achieve our near-term strategic objectives, and we are grateful for Arena’s commitment to Comera’s success.”

Arena will also have an additional stock option of $15-30 million. Comera will use the proceeds for “working capital and general corporate purposes.”

At the date of publication, Eddie Pan held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Eddie Pan specializes in institutional investments and insider trading. He writes for InvestorPlace’s Today’s Market team, which focuses on the latest news on popular stocks.

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FairyGene Cosmetics moves to Bristol and eyes growth https://lastjeudi.org/fairygene-cosmetics-moves-to-bristol-and-eyes-growth/ Mon, 12 Sep 2022 01:56:25 +0000 https://lastjeudi.org/fairygene-cosmetics-moves-to-bristol-and-eyes-growth/ When the owners of cosmetics-making startup FairyGene first settled in Newtown in 2017, little did they know a global pandemic would nearly derail their efforts before they could shed their first batch of personalized body creams. . Luckily, FairyGene co-owner and CEO Yong Liu has 20 years of experience in pharmaceutical chemistry, and he and […]]]>
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American tower: high valuation; Still a great prospect (NYSE:AMT) https://lastjeudi.org/american-tower-high-valuation-still-a-great-prospect-nyseamt/ Sat, 10 Sep 2022 11:03:00 +0000 https://lastjeudi.org/american-tower-high-valuation-still-a-great-prospect-nyseamt/ curious tiger / iStock via Getty Images As a value investor, I tend to steer clear of companies that trade at high multiples, especially if those companies aren’t showing significant organic growth. Growth by acquisition can be attractive under the right circumstances, but even that carries certain risks. That said, I don’t mind paying a […]]]>

curious tiger / iStock via Getty Images

As a value investor, I tend to steer clear of companies that trade at high multiples, especially if those companies aren’t showing significant organic growth. Growth by acquisition can be attractive under the right circumstances, but even that carries certain risks. That said, I don’t mind paying a high sum for a company that is trading at high levels if it is a leader in its industry and generates strong, consistent cash flow that increases over time. A great prospect that fits this description is American tower (NYSE: AMT). As the name suggests, the company owns a large number of communication towers in various parts of the world. He rents them out to organizations that need data transmission to operate. The company is also starting to focus a lot on the data center market, seeing it as another space that has similar characteristics to owning its towers. The company’s recent financial performance has been quite impressive, and although the shares are expensive, they appear to be more or less fairly priced compared to similar companies. All things considered, I would consider the company a moderate ‘buy’ in this environment, reflecting my belief that it should deliver performance above what a broader market is expected to experience for the foreseeable future.

Great Signals

The last time I wrote about American Tower was early July of this year. I praised the company’s historic growth, growth that has come both organically and from acquiring other businesses. Because we live in a data-centric world that is guaranteed to experience continued growth in data consumption, I had a feeling the future for the business would be extremely bright. I was also impressed with the quality of the business and the strong cash flow it generated, leading me to call the business a ‘buy’. Although not much time has passed since the publication of this article, the company has generated a positive return of 2.9%. Unfortunately, that’s lower than the 4.8% rise seen by the S&P 500. But investing takes time, and I think the company’s long-term trajectory remains intact.

Historical financial data

Author – SEC EDGAR Data

When I last wrote about American Tower, we only had data covering the first quarter of its fiscal year 2022. Today, we now have data covering the entire second quarter. The company’s financial performance so far continues to impress in many ways. To see what I mean, we only have to look at revenues. During the quarter, sales reached $2.67 billion. This represents a 16.3% increase from the $2.30 billion generated in the same period last year. This growth occurred across most of the company’s businesses. But there were a few positives to consider. The biggest benefit was in the company’s data center operations. Last quarter sales totaled $191.1 million. This is much more than the 2.5 million dollars generated at the same time last year. The rise was almost entirely driven by the company’s acquisition of data center company CoreSite, which closed in the last quarter of its fiscal year 2021. It also saw revenue rise 104% across Europe , with sales dropping from $87.8 million to $178.8 million. The increase, management said, was largely due to revenue of $60.9 million from newly acquired or constructed sites, primarily related to its acquisition of Telxius Telecom SA. The third part of the fastest growing company was its operations in Latin America. Sales there increased by 16%, from $365.6 million to $425.2 million. According to management, this was mainly due to sites almost acquired or built and net contract escalations of unsubscription.

Historical financial data

Author – SEC EDGAR Data

With the rise in revenues, profitability has largely increased. Given the nature of the business, I don’t really care much about the bottom line of the business. Instead, I like to look at alternative measures for cash flow. FFO, or funds from operations, increased 33.5% from $1.24 billion in the second quarter of 2021 to $1.65 billion this year. On an adjusted basis, the growth was more modest, totaling 6.9%, from $1.08 billion to $1.16 billion. Meanwhile, the company’s EBITDA also increased from $1.48 billion to $1.67 billion. The only metric to experience some weakness was cash flow from operations. This amount went from $952 million to $915.4 million. But if we were to adjust for changes in working capital, it would have gone from $1.01 billion to $1.44 billion.

For the full year 2022, the company should continue to benefit from the organic growth and the aforementioned acquisitions it has made. While not impacting the full year, some deals the company has made should also be helpful in the long run. For example, in July this year, the company partnered with Stonepeak, a leading alternative investment firm specializing in infrastructure and real estate assets. This company will acquire a 29% stake in American Tower’s US data center business as part of a long-term strategic partnership. This particular deal involves a mix of common stock and mandatory convertible preferred stock in a transaction worth $2.5 billion, implying an enterprise value of $10.5 billion. And at the end of August, American Tower reached an agreement with the telecommunications giant Verizon Communications (VZ) to help Verizon continue to roll out its 5G network on American Tower’s U.S. communications towers. Unfortunately, we don’t know what the terms of this particular deal should look like.

All things considered, management expects total property revenue for fiscal 2022 to be between $10.28 billion and $10.46 billion. At the midpoint, this would translate to a 13.8% year-over-year increase. Adjusted FFO is expected to be between $4.455 billion and $4.565 billion, while EBITDA is expected to be between $6.535 billion and $6.645 billion. No guidance was given regarding FFO or operating cash flow. But realistic assumptions would be $5.01 billion and $5.31 billion, respectively. Adjusted operating cash flow should be around $5.13 billion. To put the amount of money the company can free up into perspective, consider that capital expenditures, excluding those on discretionary growth, are expected to be approximately $1.14 billion. Using the company’s adjusted operating cash flow figure, that would imply excess shareholder cash flow of $3.99 billion that could be used for whatever management wants.

Trading multiples

Author – SEC EDGAR Data

Using this data, it becomes quite easy to price the business. In the chart above, you can see the company’s prices both on a forward-looking basis for fiscal 2022 and using 2021 data. As you can see, stocks are getting cheaper across the board . That said, these multiples aren’t exactly cheap. But for comparison purposes, I compared the company to five similar companies. On a price/operating cash flow basis, these companies ranged from a low of 20.2 to a high of 29.2. And when it comes to the EV to EBITDA approach, those multiples are between 17 and 31.4. In both cases, three of the five companies were cheaper than our prospect.

Company Price / Operating Cash EV / EBITDA
American tower 25.9 27.3
Crown Castle (CCI) 27.4 26.2
Equinix (EQIX) 20.2 29.8
Digital Real Estate Trust (DLR) 21.6 23.7
SBA Communications Corporation (SBAC) 29.2 31.4
Iron Mountain Incorporated (IRM) 21.5 17.0

Carry

All the data I see suggests that American Tower’s future should remain bright. This does not mean that the company will always outperform the market. The shares are rather expensive on an absolute basis and seem more or less fairly priced compared to similar companies. But overall it’s a major player in the space and it’s a really high quality company that I would consider putting all my money into if I knew I was about to get into a 20 year coma. For investors looking for that kind of stability and a high probability of growth, the company certainly makes sense to consider. And because of that, I’ve decided to keep my “buy” rating for now.

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MANAGEMENT REPORT AND ANALYSIS OF THE FINANCIAL SITUATION AND OPERATING RESULTS https://lastjeudi.org/management-report-and-analysis-of-the-financial-situation-and-operating-results/ Thu, 08 Sep 2022 17:17:05 +0000 https://lastjeudi.org/management-report-and-analysis-of-the-financial-situation-and-operating-results/ The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto of the Company included in this Form 10-Q. All references herein to the "Company", "Buckle", "we", "us", or similar terms refer to The Buckle, Inc. and its subsidiary. The following is management's discussion and analysis of certain significant […]]]>
The following discussion should be read in conjunction with the condensed
consolidated financial statements and notes thereto of the Company included in
this Form 10-Q. All references herein to the "Company", "Buckle", "we", "us", or
similar terms refer to The Buckle, Inc. and its subsidiary. The following is
management's discussion and analysis of certain significant factors which have
affected the Company's financial condition and results of operations during the
periods included in the accompanying condensed consolidated financial
statements.

EXECUTIVE OVERVIEW

The company’s management considers the following as key performance indicators to assess the performance of the company.


Comparable Store Sales - Stores are deemed to be comparable stores if they were
open in the prior year on the first day of the fiscal period being presented.
Stores which have been remodeled, expanded, and/or relocated, but would
otherwise be included as comparable stores, are not excluded from the comparable
store sales calculation. Online sales are included in comparable store sales.
Management considers comparable store sales to be an important indicator of
current Company performance, helping leverage certain fixed costs when results
are positive. Negative comparable store sales results could reduce net sales and
have a negative impact on operating leverage, thus reducing net earnings.

Net Merchandise Margins - Management evaluates the components of merchandise
margin including initial markup and the amount of markdowns during a period. Any
inability to obtain acceptable levels of initial markups or any significant
increase in the Company's use of markdowns could have an adverse effect on the
Company's gross margin and results of operations.

Operating Margin - Operating margin is a good indicator for management of the
Company's success. Operating margin can be positively or negatively affected by
comparable store sales, merchandise margins, occupancy costs, and the Company's
ability to control operating costs.

Cash Flow and Liquidity (working capital) - Management reviews current cash and
short-term investments along with cash flow from operating, investing, and
financing activities to determine the Company's short-term cash needs for
operations and expansion. The Company believes that existing cash, short-term
investments, and cash flow from operations will be sufficient to fund current
and long-term anticipated capital expenditures and working capital requirements
for the next several years.

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RESULTS OF OPERATIONS

The following table shows certain financial data expressed as a percentage of net sales and the percentage change in the dollar amount of these items compared to the prior period:

                                           Percentage of Net Sales                                                              Percentage of Net Sales
                                           For Thirteen Weeks Ended                         Percentage                         For Twenty-Six Weeks Ended                         Percentage
                                       July 30,                July 31,                                                    July 30,                  July 31,
                                         2022                    2021                  Increase/(Decrease)                   2022                      2021                  Increase/(Decrease)

Net sales                                   100.0  %                100.0  %                             2.3  %                  100.0  %                 100.0  %                             2.8  %
Cost of sales (including buying,
distribution, and occupancy
costs)                                       51.8  %                 51.9  %                             2.3  %                   51.3  %                  51.3  %                             2.9  %
Gross profit                                 48.2  %                 48.1  %                             2.4  %                   48.7  %                  48.7  %                             2.7  %
Selling expenses                             22.5  %                 21.4  %                             7.8  %                   22.1  %                  20.7  %                             9.9  %
General and administrative
expenses                                      3.9  %                  3.7  %                             5.3  %                    3.9  %                   3.8  %                             3.0  %
Income from operations                       21.8  %                 23.0  %                            (3.2) %                   22.7  %                  24.2  %                            (3.4) %
Other income, net                             0.2  %                  0.1  %                           216.7  %                    0.1  %                     -  %                           203.2  %
Income before income taxes                   22.0  %                 23.1  %                            (2.5) %                   22.8  %                  24.2  %                            (3.0) %
Income tax expense                            5.4  %                  5.7  %                            (2.5) %                    5.6  %                   5.9  %                            (3.0) %
Net income                                   16.6  %                 17.4  %                            (2.5) %                   17.2  %                  18.3  %                            (3.0) %



Net sales increased from $295.1 million in the second quarter of fiscal 2021 to
$302.0 million in the second quarter of fiscal 2022, a 2.3% increase. Comparable
store net sales for the thirteen week quarter ended July 30, 2022 increased 1.6%
from comparable store net sales for the prior year thirteen week period ended
July 31, 2021. Total sales growth for the period was the result of a 3.6%
increase in the average unit retail and a 0.3% increase in the average number of
units sold per transaction, partially offset by a 1.5% decrease in the number of
transactions. Online sales for the quarter increased 6.5% to $46.2 million for
the thirteen week period ended July 30, 2022 compared to $43.4 million for the
thirteen week period ended July 31, 2021.

Net sales increased from $594.2 million for the first two quarters of fiscal
2021 to $611.0 million for the first two quarters of fiscal 2022, a 2.8%
increase. Comparable store net sales for the twenty-six week period ended
July 30, 2022 increased 2.6% from comparable store net sales for the prior year
twenty-six week period ended July 31, 2021. Total sales growth for the
year-to-date period was the result of a 1.0% increase in the number of
transactions and a 2.6% increase in the average unit retail, partially offset by
a 0.7% reduction in the average number of units sold per transaction. Online
sales for the year-to-date period increased 3.5% to $100.6 million for the
twenty-six week period ended July 30, 2022 compared to $97.2 million for the
twenty-six week period ended July 31, 2021.

The Company's average retail price per piece of merchandise sold increased
$1.53, or 3.6%, during the second quarter of fiscal 2022 compared to the second
quarter of fiscal 2021. This $1.53 increase was primarily attributable to the
following changes (with their corresponding effect on the overall average price
per piece): a 3.8% increase in average denim price points ($0.52), an 8.9%
increase in average sportswear price points ($0.46), a 3.5% increase in average
knit shirt price points ($0.36), a 5.3% increase in average accessory price
points ($0.24), a 5.5% increase in average footwear price points ($0.19), a 6.8%
increase in average woven shirt price points ($0.18), and an increase in average
price points for certain other merchandise categories ($0.23); which were
partially offset by a shift in the merchandise mix (-$0.65). These changes are
primarily a reflection of merchandise shifts in terms of brands and product
styles, fabrics, details, and finishes.

For the year-to-date period, the Company's average retail price per piece of
merchandise sold increased $1.16, or 2.6%, compared to the same period in fiscal
2021. This $1.16 increase was primarily attributable to the following changes
(with their corresponding effect on the overall average price per piece): a 4.3%
increase in average knit shirt price points ($0.42), a 1.8% increase in average
denim price points ($0.29), a 7.2% increase in average woven shirt price points
($0.20), a 4.3% increase in average footwear price points ($0.19), a 4.5%
increase in average sportswear price points ($0.19), and an increase in average
price points for certain other merchandise categories ($0.31), which were
partially offset by a shift in the merchandise mix (-$0.44). These changes are
primarily a reflection of merchandise shifts in terms of brands and product
styles, fabrics, details, and finishes.

                                       17
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Gross profit after buying, distribution, and occupancy expenses was $145.4
million in the second quarter of fiscal 2022, compared to $142.0 million in the
second quarter of fiscal 2021. As a percentage of net sales, gross profit was
48.2% in the second quarter of fiscal 2022, up slightly from 48.1% in the second
quarter of fiscal 2021. The current quarter margin improvement was due to
leveraged buying, distribution, and occupancy expenses. Merchandise margins were
flat for the quarter.

Year-to-date, gross profit was $297.5 million for the twenty-six week period
ended July 30, 2022, compared to $289.6 million for the twenty-six week period
ended July 31, 2021. As a percentage of net sales, gross profit was 48.7% for
both the first two quarters of fiscal 2022 and the first two quarters of fiscal
2021. For the year-to-date period, leveraged buying, distribution, and occupancy
expenses were offset by a 10 basis point reduction in merchandise margins.

Selling, general, and administrative expenses were 26.4% of net sales for the
second quarter of fiscal 2022, compared to 25.1% for the second quarter of
fiscal 2021. The increase was the result of increases in store labor-related
expenses (1.35%, as a percentage of net sales) and certain other expense
categories (0.55%, as a percentage of net sales). These increases were partially
offset by a decrease in expense related to incentive compensation accruals
(0.60%, as a percentage of net sales).

For the 26-week year-to-date period, total selling, general, and administrative
expenses were 26.0% of net sales for fiscal 2022, compared to 24.5% for fiscal
2021. The increase was the result of increases in store labor-related expenses
(1.35%, as a percentage of net sales) and certain other expense categories
(0.65%, as a percentage of net sales). These increases were partially offset by
a decrease in expense related to incentive compensation accruals (0.50%, as a
percentage of net sales).

As a result of the above changes, the Company's income from operations was $65.7
million, or 21.8% of net sales, for the second quarter of fiscal 2022, compared
to income from operations of $67.9 million, or 23.0% of net sales, for the
second quarter of fiscal 2021. Income tax expense as a percentage of pre-tax
income was 24.5% for the second quarter of both fiscal 2022 and fiscal 2021,
bringing the Company's net income to $50.1 million in the second quarter of
fiscal 2022 compared to $51.4 million in the second quarter of fiscal 2021.

Year-to-date, income from operations was $138.8 million for the twenty-six week
period ended July 30, 2022 compared to $143.7 million for the twenty-six week
period ended July 31, 2021. Income from operations was 22.7% of net sales for
the first two quarters of fiscal 2022 compared to 24.2% of net sales for the
first two quarters of fiscal 2021. Income tax expense as a percentage of pre-tax
income was 24.5% for both the first two quarters of fiscal 2022 and the first
two quarters of fiscal 2021, bringing year-to-date net income to $105.4 million
for fiscal 2022 compared to $108.7 million for fiscal 2021.

CASH AND CAPITAL RESOURCES


As of July 30, 2022, the Company had working capital of $218.8 million,
including $266.7 million of cash and cash equivalents and $17.4 million of
short-term investments. The Company's cash receipts are generated from retail
sales and from investment income, and the Company's primary ongoing cash
requirements are for inventory, payroll, occupancy costs, dividend payments, new
store expansion, remodeling, and other capital expenditures. Historically, the
Company's primary source of working capital has been cash flow from operations.
During the first two quarters of fiscal 2022 and fiscal 2021, the Company's cash
flow from operations was $69.5 million and $136.5 million, respectively. Changes
in operating cash flow between periods is primarily a function of changes in net
income, along with changes in inventory and accounts payable based on the timing
and amount of merchandise purchased in each respective period. Operating cash
flow is also impacted by the timing of certain other payments, including rent,
income taxes, and annual incentive bonuses. The Company's reduction in operating
cash flow for the first two quarters of fiscal 2022 compared to the first two
quarters of fiscal 2021 is primarily attributable to changes in inventory and
accounts payable as the Company built its inventory back to more normalized
levels during the first half of fiscal 2022, as well as the first quarter
payment of incentive bonuses based on the Company's strong financial results in
fiscal 2021.

Uses of cash for the two twenty-six-week periods primarily include the payment of annual bonuses accrued at year-end, inventory purchases, dividend payments, construction costs for new and renovated stores, other capital expenditures and purchases of investment securities.


During the first two quarters of fiscal 2022 and 2021, the Company invested
$14.7 million and $8.6 million, respectively, in new store construction, store
renovation, and store technology upgrades. The Company also spent $0.2 million
and $0.6 million in the first two quarters of fiscal 2022 and 2021,
respectively, in capital expenditures for the corporate headquarters and
distribution facility.

                                       18
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During the remainder of fiscal 2022, the Company anticipates completing 2 new
stores and an additional 11 full remodels. Management estimates that total
capital expenditures during fiscal 2022 will be approximately $22.0 to $27.0
million, which includes primarily planned store projects and technology
investments. The Company believes that existing cash and cash equivalents,
investments, and cash flow from operations will be sufficient to fund current
and long-term anticipated capital expenditures and working capital requirements
for the next several years. The Company has a consistent record of generating
positive cash flow from operations each year and, as of July 30, 2022, had total
cash and investments of $304.8 million, including $20.6 million of long-term
investments.

Future conditions, however, may reduce the availability of funds based upon
factors such as a decrease in demand for the Company's product, change in
product mix, competitive factors, and general economic conditions as well as
other risks and uncertainties which would reduce the Company's sales, net
profitability, and cash flows. Also, the Company's acceleration in store
openings and/or remodels or the Company entering into a merger, acquisition, or
other financial related transaction could reduce the amount of cash available
for further capital expenditures and working capital requirements.

The Company has available an unsecured line of credit of $25.0 million with
Wells Fargo Bank, N.A. for operating needs and letters of credit. The line of
credit agreement has an expiration date of July 31, 2023 and provides that $10.0
million of the $25.0 million line is available for letters of credit. Borrowings
under the line of credit provide for interest to be paid at a rate based on
SOFR. The Company has, from time to time, borrowed against these lines of
credit. There were no bank borrowings during the first two quarters of fiscal
2022 or 2021. The Company had no bank borrowings as of July 30, 2022 and was in
compliance with the terms and conditions of the line of credit agreement.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


Management's Discussion and Analysis of Financial Condition and Results of
Operations are based upon The Buckle, Inc.'s condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
consolidated financial statements requires that management make estimates and
judgments that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the financial statement date,
and the reported amounts of sales and expenses during the reporting period. The
Company regularly evaluates its estimates, including those related to inventory,
investments, incentive bonuses, and income taxes. Management bases its estimates
on past experience and on various other factors that are thought to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Management believes that
the estimates and judgments used in preparing these consolidated financial
statements were the most appropriate at that time. Presented below are those
critical accounting policies that management believes require subjective and/or
complex judgments that could potentially affect reported results of operations.
The critical accounting policies and estimates utilized by the Company in the
preparation of its condensed consolidated financial statements for the period
ended July 30, 2022 have not changed materially from those utilized for the
fiscal year ended January 29, 2022, included in The Buckle Inc.'s 2021 Annual
Report on Form 10-K.

1.Revenue Recognition. Retail store sales are recorded, net of expected returns,
upon the purchase of merchandise by customers. Online sales are recorded, net of
expected returns, when merchandise is tendered for delivery to the common
carrier. Shipping fees charged to customers are included in revenue and shipping
costs are included in selling expenses. The Company recognizes revenue from
sales made under its layaway program upon delivery of the merchandise to the
customer. Revenue is not recorded when gift cards and gift certificates are
sold, but rather when a card or certificate is redeemed for merchandise. A
current liability for unredeemed gift cards and certificates is recorded at the
time the card or certificate is purchased. The liability recorded for unredeemed
gift cards and gift certificates was $12.4 million and $16.5 million as of
July 30, 2022 and January 29, 2022, respectively. Gift card and gift certificate
breakage is recognized as revenue in proportion to the redemption pattern of
customers by applying an estimated breakage rate. The estimated breakage rate is
based on historical issuance and redemption patterns and is re-assessed by the
Company on a regular basis. Sales tax collected from customers is excluded from
revenue and is included as part of "accrued store operating expenses" on the
Company's condensed consolidated balance sheets.


                                       19
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The Company establishes a liability for estimated merchandise returns, based
upon the historical average sales return percentage, that is recognized at the
transaction value. The Company also recognizes a return asset and a
corresponding adjustment to cost of sales for the Company's right to recover
returned merchandise, which is measured at the estimated carrying value, less
any expected recovery costs. Customer returns could potentially exceed the
historical average, thus reducing future net sales results and potentially
reducing future net earnings. The accrued liability for reserve for sales
returns was $4.2 million as of July 30, 2022 and $3.0 million as of January 29,
2022.

The Company's Buckle Rewards program allows participating guests to earn points
for every qualifying purchase, which (after achievement of certain point
thresholds) are redeemable as a discount off a future purchase. In addition,
through partnership with Bread Financial and Comenity Bank (collectively the
"Bank"), the Company offers a private label credit card ("PLCC") program. Buckle
Rewards members with a PLCC earn additional points under the Buckle Rewards
program for every qualifying purchase on their PLCC card. Reported revenue is
net of both current period reward redemptions and accruals for estimated future
rewards earned under the Buckle Rewards program. A liability has been recorded
for future rewards based on the Company's estimate of how many earned points
will turn into rewards and ultimately be redeemed prior to expiration. As of
July 30, 2022 and January 29, 2022, $11.1 million and $10.6 million was included
in "accrued store operating expenses" as a liability for estimated future
rewards.

Effective July 1, 2022, the Company entered into a new five year agreement (the
"Agreement") with the Bank, to continue providing guests with PLCC services.
Each PLCC bears the Buckle brand logo and can only be used at the Company's
retail locations and eCommerce platform. The Bank is the sole owner of the
accounts issued under the PLCC program and bears full risk associated with guest
non-payment.

As part of the Agreement, the Company receives a percentage of PLCC sales from
the Bank, along with other incentive payments upon the achievement of certain
performance targets. All amounts received from the Bank under the Agreement are
recorded in net sales in the condensed consolidated statements of income.

2.Inventory. Inventory is valued at the lower of cost or net realizable value.
Cost is determined using an average cost method that approximates the first-in,
first-out (FIFO) method. Management makes adjustments to inventory and cost of
goods sold, based upon estimates, to account for merchandise obsolescence and
markdowns that could affect net realizable value, based on assumptions using
calculations applied to current inventory levels within each different markdown
level. Management also reviews the levels of inventory in each markdown group
and the overall aging of the inventory versus the estimated future demand for
such product and the current market conditions. Such judgments could vary
significantly from actual results, either favorably or unfavorably, due to
fluctuations in future economic conditions, industry trends, consumer demand,
and the competitive retail environment. Such changes in market conditions could
negatively impact the sale of markdown inventory, causing further markdowns or
inventory obsolescence, resulting in increased cost of goods sold from
write-offs and reducing the Company's net earnings. The adjustment to inventory
for markdowns and/or obsolescence was $5.6 million as of both July 30, 2022 and
January 29, 2022.

3.Income Taxes. The Company records a deferred tax asset and liability for
expected future tax consequences resulting from temporary differences between
financial reporting and tax bases of assets and liabilities. The Company
considers future taxable income and ongoing tax planning in assessing the value
of its deferred tax assets. If the Company determines that it is more than
likely that these assets will not be realized, the Company would reduce the
value of these assets to their expected realizable value, thereby decreasing net
income. Estimating the value of these assets is based upon the Company's
judgment. If the Company subsequently determined that the deferred tax assets,
which had been written down, would be realized in the future, such value would
be increased. Adjustment would be made to increase net income in the period such
determination was made.

4.Leases. The Company's lease portfolio is primarily comprised of leases for
retail store locations. The Company also leases certain equipment and corporate
office space. Store leases for new stores typically have an initial term of 10
years, with options to renew for an additional 1 to 5 years. The exercise of
lease renewal options is at the Company's sole discretion and is included in the
lease term for calculations of its right-of-use assets and liabilities when it
is reasonably certain that the Company plans to renew these leases. Certain
store lease agreements include rental payments based on a percentage of retail
sales over contractual levels and others include rental payments adjusted
periodically for inflation. Lease agreements do not contain any residual value
guarantees, material restrictive covenants, or options to purchase the leased
property.


                                       20
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The Company records its lease liabilities at the present value of the lease
payments not yet paid, discounted at the rate of interest that the Company would
have to pay to borrow on a collateralized basis over a similar term. As the
Company's leases do not provide an implicit interest rate, the Company obtains
an incremental borrowing rate based on the information available at commencement
date in determining the present value of lease payments.

The Company has elected to apply the practical expedient to account for lease
components (e.g. fixed payments for rent, insurance, and real estate taxes) and
non-lease components (e.g. fixed payments for common area maintenance) together
as a single component for all underlying asset classes. Additionally, the
Company elected as an accounting policy to exclude short-term leases from the
recognition requirements.

Consistent with guidance in the FASB Staff Q&A regarding lease concessions
related to the effects of the COVID-19 pandemic, the Company made the election
to treat all lease concessions as though the enforceable rights and obligations
existed in each contract and, therefore, did not apply the lease modification
guidance in ASC 842.

5.Investments. Investments classified as short-term investments include
securities with a maturity of greater than three months and less than one year.
Available-for-sale securities are reported at fair value, with unrealized gains
and losses excluded from earnings and reported as a separate component of
stockholders' equity (net of the effect of income taxes), using the specific
identification method, until they are sold. Held-to-maturity securities are
reported at amortized cost. Trading securities are reported at fair value, with
unrealized gains and losses included in earnings, using the specific
identification method.

OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS


As referenced in the table below, the Company has contractual obligations and
commercial commitments that may affect the financial condition of the Company.
Based on management's review of the terms and conditions of its contractual
obligations and commercial commitments, there is no known trend, demand,
commitment, event, or uncertainty that is reasonably likely to occur which would
have a material effect on the Company's financial condition, results of
operations, or cash flows. In addition, the commercial obligations and
commitments made by the Company are customary transactions which are similar to
those of other comparable retail companies.

The following table identifies the material obligations and commitments as of
July 30, 2022:

                                                                            Payments Due by Fiscal Year
Contractual obligations (dollar amounts
in thousands):                              Total            2022 (remaining)          2023-2024          2025-2026           Thereafter

Purchase obligations                     $  20,284          $         

13,089 $5,501 $1,645 $49
Deferred compensation

                       20,163                         -                  -                  -               20,163
Operating lease payments (a)               291,335                    49,165            138,195             61,631               42,344
Total contractual obligations            $ 331,782          $         

62,254 $143,696 $63,276 $62,556

(a) See footnote 6 of the condensed consolidated financial statements.


The Company has available an unsecured line of credit of $25.0 million, which is
excluded from the preceding table. The line of credit agreement has an
expiration date of July 31, 2023 and provides that $10.0 million of the $25.0
million line is available for letters of credit. Certain merchandise purchase
orders require that the Company open letters of credit. When the Company takes
possession of the merchandise, it releases payment on the letters of credit. The
amounts of outstanding letters of credit reported reflect the open letters of
credit on merchandise ordered, but not yet received or funded. The Company
believes it has sufficient credit available to open letters of credit for
merchandise purchases. There were no bank borrowings during the first two
quarters of fiscal 2022 or the first two quarters of fiscal 2021. The Company
had outstanding letters of credit totaling $5.8 million and $2.7 million as of
July 30, 2022 and January 29, 2022, respectively. The Company has no other
off-balance sheet arrangements.

                                       21
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SEASONALITY


The Company's business is seasonal, with the holiday season (from approximately
November 15 to December 30) and the back-to-school season (from approximately
July 15 to September 1) historically contributing the greatest volume of net
sales. For fiscal years 2021, 2020, and 2019, the holiday and back-to-school
seasons accounted for approximately 35% of the Company's fiscal year net sales.
Quarterly results may vary significantly depending on a variety of factors
including the timing and amount of sales and costs associated with the opening
of new stores, the timing and level of markdowns, the timing of store closings,
the remodeling of existing stores, competitive factors, and general economic
conditions.

FORWARD LOOKING STATEMENTS

Information in this report, other than historical information, may be considered
to be forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "1995 Act"). Such statements are made in good
faith by the Company pursuant to the safe-harbor provisions of the 1995 Act. In
connection with these safe-harbor provisions, this management's discussion and
analysis contains certain forward-looking statements, which reflect management's
current views and estimates of future economic conditions, Company performance,
and financial results. The statements are based on many assumptions and factors
that could cause future results to differ materially. Such factors include, but
are not limited to, changes in product mix, changes in fashion trends,
competitive factors, and general economic conditions, economic conditions in the
retail apparel industry, as well as other risks and uncertainties inherent in
the Company's business and the retail industry in general. Any changes in these
factors could result in significantly different results for the Company. The
Company further cautions that the forward-looking information contained herein
is not exhaustive or exclusive. The Company does not undertake to update any
forward-looking statements, which may be made from time to time by or on behalf
of the Company.

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